Have cash will buy, seems to be the catch phrase in corporate India where real estate is concerned. With Central Business District (CBD) valuations dipping 25-30% from their peak levels in 2007-08, companies are going in for outright purchase of office spaces than renting them. Standard Chartered Bank, media-company Sun Network, IT giants Oracle and Symphony Services have all bought up or are close to buying properties in CBD areas. The trend is mainly seen in Bangalore, Delhi, Pune, Chennai, Mumbai and Kolkata.
Early this year, Bangalore realtor Prestige Group sold 60,000 square feet of prime property to media conglomerate Sun Network.
Confirming this, Irfan Razack, chairman and MD of Prestige Estate Projects said, “We had constructed built-to-suit spaces and now corporates with long term business plans are willing to buy built-up properties.”
IT giant Oracle plans to buy one million square feet of office space in one of the upcoming projects of Bangalore-based real estate developer, Brigade Enterprises, for Rs650 crore.
In Q3 of 2009, Godrej Properties sold 52,000 square feet in Godrej waterside in Kolkata to city-based diversified business group Rose Valley. Early this year, Standard Chartered Bank also moved into new properties in Gurgaon, Bangalore and Mumbai.
According to an analyst, cash-strapped developers too are finding this a better prospect to improve cash flows than keep vacant properties. But, according to Anuj Puri, chairman and country head of Jones Lang LaSalle Meghraj, corporates are taking advantage of the fact that valuations could pick up and are making hay while the sun shines.
Goutam Chakraborty, regional director-commercial lease, Colliers International said almost all developers are willing to offload commercial properties. Buyers too are bargaining hard. It will not be too far fetched to say that the slowdown has actually proved to be a boon of sorts for companies looking at cost-effective commercial spaces.
Comments